A STUDY ON INVESTORS PERCEPTION AND SATISFACTION OF ... © 2018 JETIR May 2018, Volume 5, Issue 5 (ISSN-2349-5162)

© 2018 JETIR May 2018, Volume 5, Issue 5 www.jetir.org (ISSN-2349-5162)

JETIR1805777 Journal of Emerging Technologies and Innovative Research (JETIR) www.jetir.org 138

A STUDY ON INVESTORS PERCEPTION AND

SATISFACTION OF DEPOSITORY SERVICES

*G.Maheswari ** Dr.S.Mabel Latha Rani

Research Scholar Assistant Professor of Commerce

Deparment of Commerce Rani Anna Govt.College for Women

Manonmaniam Sundaranar University Tirunelveli

Tirunelveli

INTRODUCTION

A depository is an organization which holds investors’ securities in electronic form. The depository

also provides services related to various transaction in securities. A depository interfaces with its investors

through depository participants.

Depository participant is the agent of the depository and it’s the interface between the depository and

the investor. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers etc can

become depository participants. Depository Participants are providing various services related to trading of

securities in the stock exchanges to their clients. In this research paper the researcher studied about investors’

perception and satisfaction towards depository services provided by depository participants to their clients.

For this purpose depository services are identified and questions were asked to the respondents about the

services provided by the depository participants. The respondents opine that there exists wide gap in

perception and satisfaction towards the services rendered by the depository participants to their clients.

Keywords: Depository Services, Depository Participants’ Depository System, Dematerialization,

Rematerialisation

1. Introduction

The field of financial services in India has entered another stage of development with a shift in tis

outlook to integrate with the global markets. Investor confidence, quality services, customer expectation and

satisfaction, quick response, technology integration are the words today. With liberalization and deregulation,

the Indian markets have come out of the Government curtains. The capital market has made tremendous

progress since then aspect.

Proper market infrastructure, regulatory and legal frame works are essential for emerging capital

markets to function effectively in a growing world of financial integration. With the vast investing population

in characterized by illiteracy and poorly developed and automated stock exchanges which do not provide

enough liquidity and desired level of transparency in operation. The Government of India in 1996 enacted the

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Depositories act, 1996 to kick start depositary services in a planned and systematic manner. Securities and

Exchange Board of India provided the support to Government’s endeavor.

II. Objective the study

The present study is aim to measure the investor’s level of perception and satisfaction towards

depository services rendered by depository participants to their clients. For the fulfillment of the study the

following objectives were framed.

To identify the perception towards depository services between male and female respondents.

To identify the perception towards depository services among different age group respondents.

To identify the investors gap in perception and satisfaction towards the depository services rendered

by depository participants.

Scope of the study

The scope of the study in terms of objectives is restricted to the Depository Participants of Chennai

City.

Depository Participant- A Bird’s Eye View

A Depository is an organization where the securities are kept in the electronic form. At present there

are two depositories in India namely NSDL promoted by NSE, and CDSL promoted by BSE.NSDL is the

first Depository in India. It was registered on 8th June 1996 with the Securities and Exchange Board of India.

It was set up as a result of Depositories Act, 1996 as a public limited company and promoted by the Industrial

Development Bank of India (IDBI), Unit Trust of India (UTI) and the National Exchange (NSE) to facilitate

trading and settlement of securities in dematerialized form.

The Depository Act 1996 introduced a multi depository framework for scrip less settlement. The Stock

Exchange, Mumbai with the country’s leading banks like Bank of Baroda, Bank of India, HDFC Bank and

SBI has promoted the Central Depository Services Limited, India’s second depository for dealing in securities

in electronic form. CDSL had an initial paid up capital of 100 crores. Securities and Exchange of India (SEBI)

has granted the certificate of registration under regulation 7 of SEBI (Depositories and Participants)

regulations, 1996 to CDSL on 19th August, 1998. CDSL has thus become the second depository in the country.

In India, a Depository Participant (DP) is described as an agent of the depository or A Depository

Participant (DP) is an agent appointed by the Depository. They are the intermediaries between the depository

and the investors. The relationship between the DPs and the depository is governed by an agreement made

between the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as

such with SEBI under the sub section 1A of Section 12 of the SEBI Act. As per the provisions of this Act, a

DP can offer depository-related services only after obtaining a certificate of registration from SEBI. The two




depositories registered under the Depositories Act are NSDL (National Securities Depository Limited) and

CSDL (Central Depository Services Limited). As of 2016, there were 277 DPs of NSDL and 586 DPs of

CDSL registered with SEBI. A DP can offer depository services only after it gets proper registration from

SEBI. Banking services can be availed through a branch whereas depository services can be availed through

a DP.

Role of Depository Participants

A depository participants is an authorized agent of depository who effects the transaction as per the

instruction of the client. Depository participants interacts with its clients/ investors through its agents called

depository participants. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers

etc can become depository participants. For any investor to avail the services provided by the depository

participants. He /she has to open Demat account (Depository Account) with any of the depository participants.

It facilitates dematerialization, settle trades and effects of corporate actions. Depository participants business

are grouped into five segments they are account opening, Dematerialization, Rematerialisation, trading and

settlement and pledge and Hypothecation.

Benefits of Depository system

The benefits from the depositary system are following:

It reduces the cost of the issue and the transfer of securities by eliminating stamp duty.

It reduces the scope of theft, forgery damages to securities certificates.

It eliminates bad deliveries.

It entitles the transferee to all the rights associated with the securities immediately on the settlement

of purchase transaction.

It enhances the liquidity of securities in the market.

It makes faster disbursement of non -cash corporate benefits like rights, bonus, etc. possible.

It reduces brokerage by many brokers for trading in dematerialized securities.

It eliminates problems relating to change of address of investors, transmission etc.

It eliminates problems relating to selling securities on behalf of a minor.

Hypothesis of the study

The hypotheses formulated for the study is given below.

Ho: There is no significant difference between gender and perception of respondents towards of

depository services.




Ha: There is a significant difference between gender and perception of respondents towards of

depository services.

Ho: There is no significant difference among age group of the respondents towards the services

rendered by depository participants.

Ha: There is a significant difference among age group of the respondents and the perception towards

the depository services rendered by depository participants.

Ho: There is no significant difference in perception and satisfaction towards the depository services

among the respondents

Ha: There is a significant difference in perception and satisfaction towards the depository services

among the respondents

5. Research Methodology

In order to achieve the aforesaid objectives of the study, the both primary data and secondary

data were collected. The primary data have been collected through the questionnaire. Secondary data have

been collected from report and bulletins of SEBI, journals, articles and magazines. Convenience sampling

method is applied for the selection of depository participants and investors, a sample size of 150 respondents

is selected for this study contact directly and collect details from 23 depository participant office in the study

area.

5.3. Tools used for analysis

The collected data is analyzed with the help of Percentages, ANOVA and Paired‘t’ test by

using SPSS software.

II. Literature Review

Aggarwal and Dixit (1996) “A study on The Depositories Legislation: A Critical Evaluation," In this

the researchers expressed their views about the legal framework for depository system in India. The authors

explained the benefits of the paperless trading, responsibilities of depository or participants and eligibility

criteria, etc.

Sarkar (1996) “A study on Implications of Depositories Ordinance 1995” The researcher analyzed

the implications of the scrip less trading and share transfer based on book entry merely due to the existence

of the depository ordinance 1995.

George (1996) “A study on Towards a Paperless Settlement System” In this study the researcher

explained the role of the NSDL in revolutionizing the paperless stock settlement system of the country. The

author also examined the steps taken by the depository to ensure that the scrip less trading system is a success

and stressed on the importance of the role of the regulator in making the depository system successful.

Gurusamy (1996) “A study on Depository System-How a Viable Alternative" In this study the

researcher explained about the introduction of depository system would help in transfer of securities in the




capital market by a mere book entry. The author pointed out the advantages of depository system such as

delay in transfer, registration, fake certificates, soaring cost of transactions, more paper work, non-availability

of depositories in when the transfer of securities take place by physical delivery.

Hurkat and Ved (1999) “A study on Depositary-An Inevitable Institution" discussed the role of

depository system in many advanced countries in the stock and capital markets during the world over. The

authors analyzed the services offered by NSDL like dematerialization, re-materialization, trading fee or

charges, comparison of a bank and a depository for the benefits of the depository.

Kannan (2008), “A study on Market Comparable Approach” In this study the author highlighted

that dematerialization has certainly brought about lot of improvement in the investment habits in our country

and in bane for the companies and has created havoc in maintaining the members register and in conducting

the members meeting.

Sultan Sing and Sakshi Goyal (2011) “A study on Factors affecting the decision making of the

investors in depository system”. In this study the author found that some variables are affecting the decision

making of the investors in depository system and the variables are shorter settlement period, safety of securities

with the depositories, attitude of the staff available with the DP’s, timely services provided by the DPs to the

investors, reduction in transaction cost, repatriation of sales proceeds of shares/debentures.

Dr. B.VenuGopal, C N Krishna Naik (2014), “A study on Role of Depository Participants in Capital Market”.

In this study the researchers framed two objectives to know about the depository participants namely to study

residential status of the depository participants influence in capital market and to study market segment

dealing of selected depository participants. To achieve these objective chi-square and F test was applied. The

study concluded that the area status of the depository participants has influence on their capital market

segment dealings and there is significance difference in the capital market segment dealings of depository

participants.

6. Analysis and Findings of the study

TABLE: 6.1

DATA VALIDITY & RELIABILITY TEST

Variables Cronbach’s Alpha

Investors level of perception towards the

functions& services rendered by the

depository participants

.949

Investors level of satisfaction towards the

functions& services rendered by the

depository participants

.948




The result of the Cronbach alpha reliability test shows that the value of alpha for perception towards

the function and services rendered by the depository participants is 0.949 and for satisfaction towards the

function and services rendered by the depository participants is 0.948. Since Cronbach alpha value is greater

than 0.7, the data collected for this study is highly reliable.

TABLE: 6.2

DEMOGRAPHIC & ECONOMIC PROFILE THE RESPONDENTS

Particulars Number of respondents Percentage

Gender :

Male

Female

Total

128

22

150

85

15

100

Age :

Below 30 years

30-40yrs

40yrs and above

Total

31

50

69

150

20

33

46

100

Marital status :

Married

Unmarried

Total

142

8

150

95

5

100

Educational Qualification:

School Level

Graduate

Post Graduate

Technical/Professional

Total

21

62

42

25

150

14

41

28

16

100

Occupation :

Govt. Employees

Private employee

Professional

Self Employed/

Businessman

15

60

29

46

10

40

19

31




Total 150 100

Monthly Income:

Less than Rs.10000

Rs.10001 – Rs.25000

Rs.25001 – Rs.50000

More than Rs.50000

Total

11

43

36

60

150

7

29

24

40

100

Annual Savings:

Less than Rs.50000

Rs.50001 – Rs.100000

More than Rs.100001

Total

49

32

69

150

33

21

46

100

DEMAT Account Holders

Yes

Total

150

150

100

100

Source: Primary data

Out of 150 respondents, the sample group consists of 85 percent male members and 15 percent female

members, 95 percent married, while 5 percent unmarried well learned members 28 percent as post graduates,

41 percent graduates, 16 percent with technical/professional and remaining 14 percentage of respondents have

completed their school education only. The sample group consists of people with different age group, among

them 20 percent belongs to below 30 years, 33 percent belongs to the age group of 30-40 years and 46 percent

belongs to the age group of above 40 years. Hence it is observes that majority of the respondents are

youngsters and middle aged investors. Among them 25 percent of respondents have hailed from rural area,

while 62 percent from urban area and 13 percent from semi urban area. The occupation of the investors is also

an important variable in stock market investment because it directly affects the investor’s income, expenses,

savings etc. The information pertaining to occupational categories reveals that 10 percent are government

employees, 40 percent are private employees, 19 percent as professionals and 31 percent doing business and

self – employed. With regards to monthly income it is found that 7 percent of the investors monthly income

up to Rs.10000, 29 percent in between Rs.10001 to 25000, whereas 24 percent of them have monthly income

ranging from Rs.25001 to Rs.50000 and 40 percent of the sample respondents earns monthly income of more

than Rs.50000. It is evident from the table 33 percent respondent’s saves up to Rs.50000 per year as annual

savings, 21 percent of them saves Rs.50001 to Rs.100000 and 46 percent saves more than Rs.100000 as annual

savings. DEMAT account is necessary to participate in the stock market. From above table out of 150

respondents, 82 percent of stock market investors having DEMAT account for the purpose of trading their




stocks and shares and remaining 18 percent of investors does not having the DEMAT account for the share

market dealings.

TABLE: 6.3

Result of ANOVA

Gender of investors and Perception towards the depository services rendered by depository

participants

Nature of Services Source Sum of

square

DF Mean

square

F Sig

Opening DEMAT

Account

Between Groups 4.405 1 4.405 13.590 .001 **

Within Groups 47.969 148 .324

Total 52.373 149

Maintenance of Records

holdings in Electronic

Format

Between Groups .414 1 .414 1.434 .233


Total 43.093 149

Facility of Electronic

Credits

Between Groups .061 1 .061 .177 .675


Total 50.833 149

Pledging of

Dematerialized Securities

Between Groups .414 1 .414 .647 .423


Total 95.093 149

Regularly SMS alert to the

BOs

Between Groups .390 1 .390 .946 .332


Total 61.473 149

DEMAT Service Charges

Between Groups .202 1 .202 .439 .508


Total 68.193 149

Frequency of Depository

Contact

Between Groups .009 1 .009 .014 .905


Total 87.500 149

Settlement Period

Between Groups 1.289 1 1.289 2.678 .104


Total 72.560 149

Safety of Security Between Groups .293 1 .293 .755 .386





Total 57.793 149

Attitude of Staff

Between Groups 5.327 1 5.327 15.110 .001 **


Total 57.500 149

Availability of well trained

staff

Between Groups 9.132 1 9.132 18.453 .001 **


Total 82.373 149

Timely Services

Between Groups 13.007 1 13.007 18.696 .001 **


Total 115.97

3

149

Time Taken for Processing

Between Groups 5.341 1 5.341 7.425 .007 **

Within Groups 106.45

2

148 .719

Total 111.79

3

149

Timely Remittance of

Sales Proceeds

Between Groups 1.569 1 1.569 1.996 .160


5

148 .786

Total 117.87

3

149

Repatriation of Sales

Proceeds

Between Groups 3.443 1 3.443 4.583 .034 *


7

148 .751

Total 114.64

0

149

Cost of Services Rendered

Between Groups 2.959 1 2.959 4.288 .040 *


4

148 .690

Total 105.09

3

149

Note: * denotes Significant ** denotes Highly Significant




Since P value is less than 0.01 the null hypothesis is rejected at 1% level with regards to the opening

of DEMAT account, Attitude of Staff, Availability of well trained staff, Timely Services and Time Taken for

Processing. Hence there is a significant difference between gender and perception for the aforesaid variables.

Since P value is less than 0.05 the null hypothesis is rejected at 5% level with regards to the

Repatriation of Sales Proceeds and Cost of Services Rendered. Hence there is a significant difference between

gender and perception for the aforesaid variables.

There is no significance difference between male and female clients in the perception with regards to

the maintenance of records holdings in electronic format, facility of electronic credits, pledging of

dematerialized securities, regularly SMS alert to the BOs, DEMAT service charges, frequency of depository

contact, settlement period, safety of security and timely remittance of sales proceeds by the respondents.

TABLE: 6.4

Result of ANOVA

Age of investors and Perception towards the depository services rendered by depository participants

Nature of Services Source Sum of

square

DF Mean

square

F Sig

Conveniences of Opening

DEMAT Account

Between Groups 2.037 2 1.019 2.975 .054


Total 52.373 149


holdings in Electronic

Format

Between Groups .543 2 .272 .938 .394


Total 43.093 149

Facility of Electronic

Credits

Between Groups 2.871 2 1.436 4.400 .014 *


Total 50.833 149

Easy of Pledging of

Dematerialized Securities

Between Groups 3.291 2 1.646 2.635 .075


Total 95.093 149


BOs

Between Groups 1.001 2 .500 1.216 .299


Total 61.473 149

DEMAT Services Charges Between Groups 3.892 2 1.946 4.449 .013 *





Total 68.193 149


Contact

Between Groups 9.633 2 4.817 9.093 .001 **


Total 87.500 149

Settlement Period

Between Groups 2.214 2 1.107 2.314 .102


Total 72.560 149

Safety of Security

Between Groups 3.993 2 1.996 5.455 .005 **


Total 57.793 149

Attitude of Staff

Between Groups 4.495 2 2.247 6.233 .001 **


Total 57.500 149


staff

Between Groups 11.284 2 5.642 11.667 .001 **


Total 82.373 149

Timely Services

Between Groups 20.700 2 10.350 15.969 .001 **


Total 115.973 149

Time Taken for Processing

Between Groups 25.498 2 12.749 21.717 .001 **


Total 111.793 149

Timely Remittance of

Sales Proceeds

Between Groups 25.143 2 12.572 19.929 .001 **


Total 117.873 149


Proceeds

Between Groups 28.383 2 14.192 24.186 .001 **


Total 114.640 149

Cost of Services Rendered

Between Groups 22.148 2 11.074 19.626 .001 **


Total 105.093 149


Since P value is less than 0.01 the null hypothesis is rejected at 1% level with regards to the frequency

of depository contact, safety of security, attitude of staff, availability of well trained staff, timely services,




time taken for processing, timely remittance of sales proceeds, repatriation of sales proceeds and cost of

services rendered. Hence there is a significant difference among age group of the respondents with respect to

the perception of the aforesaid variables.

Since P value is less than 0.05 the null hypothesis is rejected at 5% level with regards to the facility of

electronic credits and DEMAT services charges. Hence there is a significant difference among age group of

the respondents with respect to the perception of these two variables.

There is no significant difference in the perception among age group of the respondents with regards

to the conveniences of opening DEMAT account, maintenance of records holdings in electronic format, easy

of pledging of dematerialized securities and settlement period.

TABLE: 6.5

INDEPENDENT Z-TEST

INVESTORS PERCEPTION AND SATISFACTION TOWARDS THE SERVICES RENDERED

BY THE DEPOSITORY PARTICIPANTS

Particulars Perception Satisfaction

Z DF P Value Mean SD Mean SD

Conveniences of Opening

DEMAT Account 1.41 .593 1.25 .567 2.705 149 .008 **


holdings in Electronic Format 1.37 .538 1.13 .341 4.308 149 .001 **

Facility of Electronic Credits 1.37 .584 1.43 .628 -.945 149 .346

Easy of Pledging of

Dematerialized Securities 1.63 .799 1.47 .672 2.219 149 .028 *


BOs 1.51 .642 1.45 .640 1.119 149 .265

DEMAT Service Charges 1.59 .677 1.65 .891 -.680 149 .498


Contact 1.70 .766 1.61 .851 1.176 149 .241

Settlement Period 1.64 .698 1.59 .868 .742 149 .459

Safety of Security 1.39 .623 1.61 .767 -3.229 149 .002 **

Attitude of Staff 1.50 .621 1.91 .999 -4.803 149 .001 **





staff 1.59 .744 1.93 1.094 -3.998 149 .001 **

Timely Services 1.65 .882 1.73 .960 -1.061 149 .290

Time Taken for Processing 1.73 .866 1.63 .832 1.442 149 .151

Timely Remittance of Sales

Proceeds 1.75 .889 1.47 .682 3.808 149 .001 **


Proceeds 1.68 .877 1.55 .550 1.968 149 .051

Cost of Services Rendered 1.71 .840 1.55 .738 2.509 149 .013 *


Since P value is less than 0.01 the null hypothesis is rejected at 1% level with regards to the

conveniences of opening DEMAT account, maintenance of records holdings in electronic format, safety of

security, attitude of staff and timely remittance of sales proceeds. Hence there is a significant difference in

perception and satisfaction towards the depository services provided by depository participants to their clients

for the above mentioned variables.

Since ‘P’ value is less than 0.05 the null hypothesis is rejected at 5% level with regards to the easy of

pledging of dematerialized securities and cost of services rendered. Hence there is a significant difference in

perception and satisfaction towards the depository services provided by depository participants to their clients

for the above mentioned variables.

There is no significant difference in perception and satisfaction with regards to the facility of electronic

credits, regularly SMS alert to the BOs, DEMAT service charges, frequency of depository contact, settlement

period, timely services, and time taken for processing and repatriation of sales proceeds by the respondents.

This indicates that these services are considered as very important in buying and selling of securities through

Depository participants.

Suggestions to Depository Participant

1. Investors in Chennai is tremendously increased comparing to last decade’s .Therefore the Number of

DPs and their branches should be increased throughout Chennai.

2. DPs’ franchises should have proper infrastructure like seating arrangements, rest room, proper drinking water

facilities and car parking instead of merely working as ‘collection booth.’

3. Illegal Debits or Credits in DEMAT accounts of investors should be heavily penalized by depositories.

4. Regularly organise Awareness Programmes to aware people about the guidelines in using DEMAT system.

5. Periodical statement should be send to the every DEMAT account-holder at regular intervals.




6. Send the monthly bulletins to their customers and proper update information should be mentioned in it for the

convenience of the Investors.

Recommendations

The following recommendations helps to maintain a good relationship with the Depositories with

their clients.The study recommends some working modifications to follow the useful aspect of DEMAT

charges for small investors.

1.Without touching the liberty of DPs to charge whatever fees they like, should be reasonable and follow a

systematic fees structure .Such structure create competitive environment among DPs on the matter of DEMAT

cost. This will strengthen DPs to sustain preferred standard of services for investors, will be helpful in

choosing a DP by investors on the basis of cost and will act as an effective self-control tool to lower down

DEMAT charges forever in the interest of investors.

2. Investors should be made aware about precautions to be taken regarding different DEMAT operations (such as in

case of sending securities for dematerialisation, at the time of submitting Pay-in of securities for settlement of Market

trade and for receiving corporate benefits etc.) to prevent them against any inconvenience and losses later on.

Conclusion of the Study

Depository system and services provided by them has been welcomed by the investors of Chennai

City investors. Investors are undoubtedly benefited by the services rendered by the depository participants in

terms of improved services, greater protection, and strong elements of accessibility, efficiency and

transparency in operations concerning securities.

References

1. Aggarwal, V. K. and Dixit, S. K. (1996), “The Depositories Legislation: A Critical Evaluation," Chartered

Secretary, April, pp. 367-376.

2. Sarkar, A. K. (1996), "Implications of Depositories Ordinance, 1995,"

The Management Accountant, June-July, pp. 473-477.

3. George, Philip (1996), “Towards a Paperless Settlement System”, Business World, October, pp. 134-135.

4. Gurusamy, S. (1996), "Depository System-How a Viable Alternative", The Management Accountant, July,

pp. 478-482.




5. Kannan (2008), “Market Comparable Approach”, Journal of Financial Services Research, Vol-24, No2-3,

pp.121-148.

6. Prof .Sultan Sing and Sakshi Goyal (July 2011), “Analysis factor affecting the decision making of the

investors in depository system” Journal of Banking, Financial Services and Insurance Research, Vol 1, pp13-

38

7. Dr. B.VenuGopal, C N Krishna Naik (2014), “A study on role of depository participants in capital market”.

International Journal of Research, Vol-1, Issue-11, December 2014.

8. Dr. B.Venu Gopal, & Dr.Ch. Raama Prasada Rao (2014) “A study on Behaviour of depository participants

towards depository system and Indian capital market”. EPRA International journal of Economic and Business

Review (Online Journal) Vol-2, Issue-2, February 2014.

5. Hurkat, Manoj and Ved, Umesh (1999), “Depositary-An Inevitable Institution", Chartered Secretary,

September, pp. 991-993.

6

Websites

www.cdsl.com

www.nsdl.com

www.nse.com

www.bse.com


http://www.cdsl.com/

http://www.nsdl.com/

http://www.nse.com/

http://www.bse.com/

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A STUDY ON INVESTORS PERCEPTION AND SATISFACTION OF ... © 2018 JETIR May 2018, Volume 5, Issue 5 (ISSN-2349-5162)